NZ online ad spend hits $200m

Online ad spend has hit $200 million for the first time ever in the NZ market. That’s according to the latest IABNZ PwC Ad Spend report, and reflects 21 percent year-on-year growth over 2014. What’s more, we are on target for between $750m and $800m interactive revenue for the year.

The global trends identified in the report are as follows:

• Interactive will be the biggest medium in a third of the global ad market by 2017

• Video consumption on mobile devices is forecast to grow by 43.9% in 2015 and 34.8% in 2016

• Online Video will account for 12.8% of total interactive ad spend market by 2017

• Mobile is driving growth in Internet market share and global ad spend

• Paid search to grow at an average rate of 14% a year to 2017

Let’s break it down and look at the three standouts — Search, Social and Mobile.

Search and directories had 28% growth. While nowhere near the massive percentage growth mobile has had, the actual growth in revenue for this segment was around $23m (versus $3.4m in mobile). This is in line with the continued trend to shift budget from traditional to digital spend, and no doubt the increased competition is also impacting the cost of the online activity.

Social spend is showing no signs of slowing down. With improvements in targeting and measurability, we’ve seen a definite willingness in the market to continue to invest more while the ROAS is there. Interestingly, Facebook reports mobile advertising revenue represented approximately 78% of advertising revenue for the third quarter of 2015, up from 66% of advertising revenue in the third quarter of 2014 (Source).

In estimating mobile ad spend, IABNZ  considers revenue from general display or search engine listings viewed on mobile devices such as tablets or smart phones.

Mobile revenue is the highest ever with $6.94m in spend and an overall growth of 97% year-on-year. Even more extraordinary is that smartphone revenue increased by 123%. While these growth numbers seem huge, mobile still only has around 3.5% share of the interactive ad spend (although over 50% of all search is conducted on mobile devices). Accordingly, we expect to see a continuation of this trend as mobile is sure to take up a more significant percentage of overall spend.

Why should you care?

While there is big opportunity to maximise return on video, mobile should not be overlooked. With only 3.5% of total spend going towards mobile advertising and over 50% of eyeballs using mobile devices to search, mobile presents relatively inexpensive options to reach your target audience.

We suspect the lack of mobile competition, however, is largely due to difficulties in tracking multi-device conversions and attributing due credit to mobile ads when conversions ultimately result. Those prepared to invest the time in improving cross-device tracking and attribution and devising a forward-thinking mobile strategy will be the winners.

For the rest, we think the ‘old’ saying that if you don’t have a website your business probably won’t be around in five years now holds true for those without a mobile-friendly website. Don’t believe us? Don’t wait five years for us to say we told you so.

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